The world's largest corporate deal in an emerging market, a tie-up worth nearly $50 billion between two telecommunication companies, Bharti Airtel in India and MTN Group in South Africa, came to a screeching halt Saturday. Bharti called off negotiations after MTN turned Bharti's takeover plan upside down, proposing to take over Bharti instead. After bankers from both sides agreed in principle to a Bharti-controlled structure on May 16, MTN's board met this week and proposed a different transaction, in which Bharti Airtel would become a subsidiary of MTN, Bharti said Saturday. “This convoluted way of getting an indirect control of the combined entity would have compromised the minority shareholders of Bharti Airtel and also would not capture the synergies of a combined entity,” Bharti said in a statement. “More importantly,” Bharti added, “Bharti's vision of transforming itself from a homegrown Indian company to a true Indian multinational telecom giant, symbolizing the pride of India, would have been severely compromised.” The situation was “completely unacceptable,” Bharti said. MTN Group had no immediate comment. A combination with MTN would have been Bharti Airtel's first major foray outside India. The two companies have roughly the same number of subscribers and market capitalization, so any deal was expected to be more like a merger of equals, bankers and analysts said. Bharti seems to have been unwilling to cede control of the deal, though, they said. Bharti said Saturday that discussions had gone on until late Friday night “without a breakthrough” and that it had decided to “disengage” from the discussions. The lead bankers from Bharti and MTN had agreed to structure the deal so that Bharti Airtel would be the parent company. MTN's counterproposal would have made Bharti Airtel a subsidiary of MTN but given Bharti's parent company, Bharti Enterprises, a controlling stake in the combined company, said one Bharti executive briefed on the negotiations. Even though Bharti Enterprises would control the new telecommunications giant, that was not acceptable to Bharti, he said. “Our vision is to become a global Indian telecom,” he said, adding that the collapse of the deal was “really about Indian pride.” The collapse of the deal is likely to be a major blow for Sunil Bharti Mittal, the chairman and managing director of Bharti Airtel, and founder of Bharti Enterprises, an Indian conglomerate with ambitious international plans. It is also likely to take a heavy toll on MTN's stock price. The company's shares have traded up more than 16 percent in the past month on the Johannesburg Stock Exchange on talk of a deal. Bharti said Saturday that more than a dozen bankers from the United States and Europe had given it “confident letters of funding” of over $60 billion.
